Written by Martin Young, Staff Writer. Reviewed by Felix Ng, Staff Editor.
Written by Martin Young, Staff Writer.
Reviewed by Felix Ng, Staff Editor.
Tokenized stocks risk liquidity and revenue fragmentation: Research
Latest NewsPublishedMay 22, 2026
Tokenized Stocks Pose Liquidity and Revenue Risks
The rise of tokenized stocks is being viewed as a threat to traditional finance, with potential risks of liquidity and revenue fragmentation. According to research, the breakup of consolidated liquidity could lead to a serious structural threat. This is because capital may disperse from centralized exchanges to multiple blockchain platforms, leading to a decrease in trading volume and order flow.
The US Securities and Exchange Commission’s recent move to allow third parties to list tokenized stocks could exacerbate this issue. When the same stock is tokenized across different blockchain networks, trading volume and order flow become dispersed, rather than being concentrated on a single venue. This could lead to revenue fragmentation, where financial revenues that should accrue to domestic exchanges instead flow offshore.
Capital Fragmentation
Capital fragmentation is already underway, with real-world asset open interest on the Hyperliquid decentralized exchange reaching an all-time high of $2.6 billion. This shift poses a strategic dilemma for incumbent financial institutions and regulators. Tokenized stocks currently make up just 4.4% of total RWA onchain value, but this is expected to grow.
Experts warn that markets could be split into disconnected pools, creating price tracking errors and shadow-shorting vulnerabilities. However, tokenized stocks also provide practical market benefits, such as faster settlement, fractional ownership, and lower transaction costs. The Blockchain Council argues that these benefits could accelerate the transition of the US financial system to onchain blockchain-based rails.
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“This creates price discrepancies across platforms, increases slippage on large orders, and ultimately degrades overall market efficiency.”
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Revenue fragmentation remains a risk
The second potential structural disruption is revenue fragmentation, which follows directly from market fragmentation.
“As tokenized stocks trade across multiple platforms in disaggregated form, financial revenues that should accrue to domestic exchanges instead flow offshore, with direct implications for national financial competitiveness,” said Yoon.
Capital fragmentation is already underway with real-world asset open interest on the Hyperliquid decentralized exchange hitting an all-time high of $2.6 billion this week.
Related: Tokenized RWA market grows 420% since 2025 on regulatory clarity, access
Yoon concluded that this shift “poses the deepest strategic dilemma for incumbent financial institutions and regulators alike.”
CEO of digital assets at FG Nexus, Maja Vujinovic, also cautioned that markets could be split into “disconnected pools” which can create “dangerous price tracking errors and shadow-shorting vulnerabilities where there aren’t enough localized buyers to stabilize a specific token’s price.”
Tokenized stocks make up just 4.4% of total RWA onchain value. Source: RWA.xyz
Meanwhile, SEC Commissioner Hester Peirce said on Thursday that any exemption would be “limited in scope” by only permitting “digital representations of the same underlying equity security that an investor could purchase in the secondary market today.” The full ruling for what will and won’t be permitted has yet to be finalized.
Many practical market benefits
There are arguments that tokenized stocks provide practical market benefits, such as faster settlement, fractional ownership, lower transaction costs and the potential for round-the-clock trading, according to the Blockchain Council.
Global accessibility lets non-US investors gain exposure to high-demand US stocks without being blocked by local brokerage limitations.
Senior research analyst at Siebert Financial, Brian Vieten, said “We believe this will accelerate the transition of the US financial system from legacy rails to onchain blockchain-based rails.”
“We expect a portion of this flow to eventually flow to high-quality blockchain networks like Bitcoin and Hyperliquid,” he added.
Magazine: Crypto scammers face death, Aussie CGT makes Asian hubs attractive: Asia Express
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.
- SEC
- Stocks
- RWA Tokenization
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- Investments
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